Merely because of no response to notice u/s 133(6) in the manner the AO expected not a basis for making additions – ITAT
In a recent judgment, ITAT Delhi held that merely because bank not responded to notice issued u/s 133(6) in the manner the AO expected cannot be a basis for making the additions in the hands of the Assessee when the Assessee has produced cogent documents in support of his claim.
ABCAUS Case Law Citation:
4633 (2025) (07) abcaus.in ITAT
In the instant case, the Revenue had challenged the order passed by the Commissioner of Income Tax (Appeals)/ National Faceless Appeal Centre in deleting addition u/s 68 unexplained deposit of cash.
The Assessee was a Business Corresponding Agent of a Nationalised Bank. The case of the Assessee was selected for scrutiny in the ‘limited category’. Subsequently, notice u/s 143 of the Income Tax Act, 1961 (‘Act’) was issued and served upon the Assessee.
An assessment order came to be passed by the AO making an addition u/s 68 of the Act on account of unexplained deposit of cash.
Aggrieved by the assessment order, the Assessee preferred an appeal before the CIT (A). The CIT(A) vide order, allowed the Appeal of the Assessee.
Before the Tribunal the Revenue submitted that the CIT(A) committed error in deleting the addition without examining the fact as to whether the Assessee was authorized to accept the Specified Bank Notes during the demonization period or not. Further submitted that, though the bank had not responded to the notice u/s 133(6) of the Act during the assessment proceedings, the CIT(A) had deleted the addition which was erroneous and the order of the CIT(A) required to be set aside by the Tribunal.
The Tribunal observed that the Assessing Officer (AO) on examination of ITR of the Assessee for Assessment Year 2017-18, observed that the Assessee deposited large amount of cash during the demonization period i.e. 09/11/2016 to 30/12/2016 in his bank account.
The AO issued notice u/s 133(6) of the Act to the Bank which confirmed that the Assessee was itsBusiness Corresponding Agent. However, no reply was received by the A.O. in respect of acceptance of ‘Special Banking Notes’. Therefore, the cash deposited in the accounts of the Assessee had been treated as unexplained and made addition u/s 68 of the Act and made addition in the hands of the Assessee.
The Tribunal further observed that during the first appellate proceedings, the Assessee submitted the certificate issued by the concerned branch of the bank, wherein it was mentioned that the Assessee was the Business Corresponding Agent of the bank and the concerned account wherein the cash was deposited was a BCA. Further, Assessee had also produced ‘Memorandum of Understanding’ entered into by the Assessee and the bank to prove that the Assessee was a Banking Corresponding Agent working for Bank and the cash deposits on the account was on behalf of the bank.
The Tribunal also observed that it was a matter of fact that during the assessment proceedings, the concerned bank had not responded to the notice issued u/s 133(6) of the Act, however during the appellate proceedings the Assessee had produced certificate issued by the bank confirming that the Assessee was the Business Correspondence Agent of the bank and also produced the MOU to prove that the Assessee was a Banking Corresponding Agent working for Bank and the cash deposits on that account was on behalf of the bank.
The Tribunal held that merely because the bank has not responded to the notice issued u/s 133(6) of the Act in the manner the A.O. expected cannot be a basis for making the additions in the hands of the assessee when the assessee had produced cogent documents in support of his claim. Even the Department had not brought anything on record to prove that the document so relied by the Assessee during the first appellate proceedings were not genuine.
Therefore, Tribunal opined that there was no error or infirmity in the order of the CIT(A) in deleting the addition.
Accordingly, appeal of the Revenue was dismissed.
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